Daegu Mayor Choo Kyung-ho speaks at a Korea Governors Association meeting held in Jeju on Friday, where he opposed using local allocation tax funds to establish a future response fund and urged cities and provinces to mount a joint response. [Daegu City]
Daegu Mayor Choo Kyung-ho speaks at a Korea Governors Association meeting held in Jeju on Friday, where he opposed using local allocation tax funds to establish a future response fund and urged cities and provinces to mount a joint response. [Daegu City]

Daegu Mayor Choo Kyung-ho on Friday opposed a government plan to draw on local allocation tax funds to establish a future response fund, urging cities and provinces to mount a joint response at a Korea Governors Association meeting held in Jeju.

Choo said the plan should be rejected outright rather than debated for possible modifications, and called for the full disbursement of local allocation taxes as required under current law and the swift implementation of fiscal decentralization measures.

If the government proceeds with the fund as planned, total local allocation tax distributions nationwide are expected to fall by about 30.5 trillion won ($22.6 billion) compared with current allocation levels.

Should surplus tax revenue from 2026 also be added to the fund, an additional roughly 10.8 trillion won in legally mandated settlement payments owed to local governments could go undistributed.

Daegu's ordinary local allocation tax alone would drop by about 1.3 trillion won as a result, raising concerns about difficulties in drawing up next year's budget.

"Using local allocation tax funds for the future response fund runs counter to the principle of locally driven growth," Choo said. "Local allocation taxes must be disbursed in full, and fiscal decentralization tasks — including raising the statutory distribution rate for local allocation taxes, increasing the local consumption tax rate, and expanding the local income tax base — must be carried out without delay."


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